Life Insurance

Life Insurance is insurance that pays out a sum of money either on the death of the insured person or after a set period. Life Insurance is required to protect people against Financial Liabilities – in our lifetime there are only 2 Liabilities which are Mortgages and Children. Life insurance is seen as a ‘needs based insurance’; prominently these needs are Mortgage and Children initially.

Both of these will cost us a significant amount of money over a prolonged period of time in which we are duty bound to get out of bed every morning and get to work and earn money in order to afford to pay for them – once they are both ‘paid off’ then the need for Life Insurance diminishes (however you would then start thinking about end of life cover – funeral etc.)

‘NEEDS’ COVERED BY LIFE INSURANCE

In the case of covering a Mortgage (which is in most cases a Reducing Loan Amount) then the Term of the policy will run for the length of the Mortgage.

In the case of covering a Mortgage and/or Children then the Term of the policy will run for the length of the Mortgage OR the number of years before your youngest child turns 25 years Old (which is the presumed financial independency age of a child in the UK)

In the case of covering a Mortgage the Sum Assured (Payout Amount) will be the same as the current Mortgage Balance – the Sum Assured is designed to reduce in line with your capital repayment mortgage and if the policy pays out it will pay out the amount of money which will be enough to pay off the mortgage – this type of policy is called a Decreasing Policy

In the case of covering a Mortgage and/or Children then the Sum Assured (Payout Amount) will be the same as the current Mortgage Balance – the Sum Assured is designed to STAY LEVEL and if the policy pays out it will pay out the full Sum Assured – this type of policy is called a Level Policy

These are the 2 ‘types’ of policy offered by any Provider in the UK – the Decreasing Policy is seen as the cheapest way to cover your Mortgage need only. Whereas the Level Policy is the more comprehensive product to choose to cover your Mortgage and Children. Determining whishc policy is right for your needs is where we come in!

LIFE INSURANCE vs CRITICAL ILLNESS

Life Insurance pays out only if you die and it relatively cheap for the simple fact that it is very unlikely that you will die before the policy expires. For example, if your policy covers you for 25 years and you are currently aged 35 – it is not likely (with looking at life expectancy statistics in the UK for men and women) that you will die before the age of 60 however you would potentially be ore likely to suffer from a Critical Illness (i.e., heart attack, stroke, cancer, Diabetes, IBD disease etc. before the age of 60 which means you would be more likely to claim and get a pay-out on a policy which has Critical Illness than just life cover.

The reality is that people are living longer because of medical research and advancements such as, new medicines, new technologies for diagnosis and treatment and better later life care – Life Expectancy is at its highest at 87 Females and 83 Males and it is predicted that Life Expectancy could easily average at 100 Years Old within the next 15 years. However, the health of the nation is getting worse and this will always be the case as we go through time. You are six times more likely to suffer CANCER today than you were 15 years ago – Females now suffer Breast Cancer at an average age of 41years Old and Males now suffer Prostate Cancer at an average age of 43 years Old BUT because medical technology is so far advanced now and will continue that way it means that a lot people who suffer Cancer (or any other illnesses) will most likely be treated and make a full recovery within 12 to 18 months – but the question that needs to be thought about is :-

If you had to take 12 to 18months off work due to suffering an illness such as Early Stage Cancer – what would you have to back, you up financially for that time off work? (In most cases like this the claimant would perhaps accrue sick pay form their occupation which can sometimes be less than the usual monthly earned amount. Alongside this, unexpected expenses come into play and at this time you would prefer to not have to worry about finances and your money.)

Answering the above question can often determine whether you feel taking Critical Illness Cover alongside your life cover is a need worth covering for you. Another element to determine this would be whether you have children? In all cases if the parent has a Critical Illness policy their children are also covered by the illnesses on the policy (with exclusions) and on some occasions the Policy may have a Death Benefit for the Children included for free in the policy.

To find out more about Critical Illness please click on the ‘Critical Illness Page’ or to find out more and get advice on your needs and what insurance is right for you please contact us on 0141 248 9787, texting 07977 489 368 or emailing admin@theinsurancehelpline.org.uk.